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NEW YORK, Jan. 17 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market ended sharply lower in busy pre-holiday trading Friday, knocked down in a selling frenzy ignited by anemic corporate earnings statements, reports on a sputtering economy and geopolitical concerns over the Iraq situation.

All stock, bond and commodity markets, as well as banks, will be closed Monday for Martin Luther King Jr. Day. Trading is to resume Tuesday.

The blue-chip Dow Jones industrial average, which lost 25.31 points Thursday, dropped 111.13 points, or 1.28 percent, to close at 8,586.74. The tech-heavy Nasdaq composite index, which fell 15.05 points in the previous session, dropped 47.55 points, or 3.34 percent, to close at 1,376.20.

The broader New York Stock Exchange composite index fell 56.83 to close at 5,108.51 while the Standard & Poor's 500 index dropped 12.82 points to close at 901.78. The American Stock Exchange composite index fell 2.14 points to close at 832.26 while the Wilshire 5000 Index dropped 120.69 to close at 8,530.33.

Volume was 1.57 billion on the Big Board and 1.56 billion on the Nasdaq Stock Market.

Analysts said stocks fell from the opening bell with technology stocks leading the way south as worried investors mulled Iraq's weaponry, a sputtering economy and anemic earnings reports.

Still reeling from Thursday's news that the United Nations had discovered chemical weapons warheads, investors faced glum news at home as well. A couple of weak economic reports trashed the theory that a solid recovery was afoot.

On top of that, analysts said investors had to stomach a steep profit decline at General Electric and weak outlooks from several tech outfits including software behemoth Microsoft, which announced plans to start paying dividends.

Even before investors considered the mixed profit news, they had to absorb more bad news on the economy.

The Commerce Department said the nation's trade deficit rose to a new record of $40.10 billion in November, from a revised $35.22 billion in October.

Economists had forecast the deficit to come in at around $37 billion. Imports saw a rise of $5.8 billion, their highest since 1984.

The Federal Reserve said industrial production, a key measure of work done by factories, mines and utilities, fell a seasonally adjusted 0.2 percent in December. Economists were expecting industrial production to rise 0.2 percent.

The Fed also said the plant in use rate fell to 75.4 percent in December, the lowest since last March. Economists had expected the ratio to rise to 75.7 percent during the month.

Also, the University of Michigan's preliminary January consumer sentiment index fell unexpectedly in January, thanks to fears of war and a worsening job market. The key gauge of U.S. consumer morale is troubling since consumers had fueled the economy's growth in recent quarters while companies tightened their belts.

Consumer attitudes come into focus during times of uncertainty about consumer spending, which makes up two-thirds of economic activity.

The preliminary current conditions index, which measures how consumers feel about their situation right now, rose to 96.9 from 96.0 in December. The expectations index, which gauges attitudes about the 12-month outlook, fell to 75.2 from 80.8.

That sour news came as Iraq continued to cast a shadow over the markets. Contradictory statements from Iraq and the weapons experts as to whether the recently discovered warheads had been in the country's December declaration could mean more trouble for stocks, experts said.

Spurred by the Iraq news, oil prices jumped to another two-year high, while gold traded near a six-year high.

Meanwhile, U.S. Treasury prices rose sharply. The 10-year bond jumped 16/32 to 99 28/32. Its yield, which moves in the opposite direction of its price, dropped to 4.01 percent from 4.08 percent late Thursday.

In Europe, stock prices ended lower in fairly active pre-weekend trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index lost 56.5 points, or 1.5 percent, to 3,825.3. The German DAX index dropped 113.25 points, or 3.7 percent, to 2,940.86 and the French CAC-40 index fell 85.66 points, or 2.7 percent, to 3,056.93.

Analysts said European stocks were pressured by the slide on Wall Street and weakness in telecom and financial issues.

Experts said markets were also pressured by the unexpected decline in U.S. consumer sentiment and industrial production, which added to the disappointing corporate news from Microsoft.

Hazama's restructuring plans added fuel to reform hopes after the plans unveiled earlier in the week by struggling department store operator Seibu Department Stores. Hazama's plan includes a bailout from banks and the spin-off of its core construction business.

Investors opted to focus their attention on low-priced shares in companies that are expected to pay comparatively high dividends.

Traders said sentiment was also lifted by continued gains in bank stocks and speculation that Iraqi President Saddam Hussein may be ousted without a war.

Elsewhere in Asia, prices ended lower in moderate trading on the Hong Kong Stock Exchange. The blue-chip Hang Seng Index, which fell 130.26 points during the previous session, lost another 128.64 points, or 1.3 percent, to 9,614.59.

Prices also ended lower on the South Korean Stock Exchange. The Korea Composite Stock Price Index, or Kospi, which added 0.40 points during the previous session, lost 12.23 points, or 1.8 percent, to 636.46.

Prices also lost ground on the Taiwan Stock Exchange. The key Weighted Index, which lost 74.41 points during the previous session, slipped another 35.51 points, or 0.7 percent, to 4,907.78.

Meanwhile, prices ended slightly lower on the Singapore Stock Exchange. The key Straits Times Index, which lost 7.10 points during the previous session, slipped another 12.69 points, or 0.9 percent, to 1,366.83.

Elsewhere, prices ended slightly lower in light trading on the Australian Stock Exchange despite gains in gold stocks. The blue-chip All Ordinaries Index, which lost 19.30 points during the previous session, eased 5.60 points, or 0.2 percent, to 3,024.70.